The construction industry operates under some of the most complex award interpretation requirements in Australia. The Building and Construction General On-site Award 2020 and the Clerks—Private Sector Award 2020 (for office-based staff) create a dual-framework that many construction employers — particularly smaller builders — fail to navigate correctly.
This guide covers leave management for Australian construction businesses: entitlements under the applicable awards and the Fair Work Act 2009, how to manage site-based workers, project-driven leave patterns, and the compliance mistakes most common in construction.
Key takeaways
- Full-time construction employees receive 4 weeks annual leave — or 5 weeks for qualifying shift workers.
- The Building and Construction General On-site Award mandates 17.5% leave loading on annual leave, with the “greater of” rule applying to penalty rates.
- Construction’s project-based work creates unique leave scenarios — employees on site closures, project transitions, and weather-related stand-downs.
- Long service leave is particularly significant in construction due to the industry’s reliance on experienced tradespeople.
- Award interpretation challenges are the number one cause of underpayment in construction — 40% of organisations cite award interpretation as their biggest compliance risk.
Which award applies?
Construction businesses typically need to manage multiple awards simultaneously:
| Award | Covers |
|---|---|
| Building and Construction General On-site Award 2020 | On-site tradespeople, labourers, and construction workers |
| Clerks—Private Sector Award 2020 | Office and administration staff |
| Manufacturing and Associated Industries and Occupations Award 2020 | Workshop-based fabrication and manufacturing employees |
| Electrical, Electronic and Communications Contracting Award 2020 | Electrical contractors |
Misclassification between awards — for example, paying an on-site carpenter under the Clerks Award — results in incorrect pay rates and leave entitlements. This is particularly common in smaller construction businesses where employees perform mixed on-site and office duties.
Award leave entitlements
| Leave type | Full-time (on-site) | Part-time (pro-rata) | Casual (on-site) |
|---|---|---|---|
| Annual leave | 4 weeks (5 weeks for shift workers) | Pro-rata by ordinary hours | None (loading compensates) |
| Personal/carer’s leave | 10 days per year | 10 days pro-rata | None (2 days unpaid per occasion) |
| Compassionate leave | 2 days per occasion | 2 days per occasion | 2 days unpaid per occasion |
| Family & domestic violence leave | 10 days paid per year | 10 days pro-rata | 10 days paid per year |
The Building and Construction On-site Award also provides specific provisions for travel and transport that affect how ordinary hours — and therefore leave accrual — are calculated.
Shift work and leave in construction
Construction’s shift patterns differ from retail or hospitality. Many construction workers start early (6:00–7:00 AM) and finish by 3:00 PM, working a standard weekday roster. However, certain construction roles — particularly in civil engineering, road work, and large commercial projects — involve shift work that rotates across all seven days.
Where construction employees work rotating shifts across all seven days, they qualify as shift workers for annual leave purposes and receive 5 weeks of annual leave under the NES.
Worked example: shift worker qualification
A labourer works the following rotating roster on a major infrastructure project:
| Week 1 | Week 2 | Week 3 |
|---|---|---|
| Mon–Fri day shift | Mon–Fri night shift | Sat–Sun day shift + Mon–Tue |
This employee rotates across all seven days, qualifying them as a shift worker for annual leave. They receive 5 weeks (190 hours for a 38-hour week) rather than 4 weeks (152 hours).
Leave loading in construction
The Building and Construction On-site Award mandates 17.5% leave loading on annual leave. The loading is calculated on the employee’s base rate — not including overtime, site allowances, or travel allowances.
The “greater of” rule applies here as in other awards: where penalty rates would exceed 17.5%, the employee receives the greater amount. However, construction penalty rates are generally lower than hospitality or retail, so the 17.5% loading is more frequently the higher amount.
Key distinction: Site allowances, tool allowances, and travel allowances are generally not included in the base rate for leave loading calculations. However, some enterprise agreements may include specific provisions — always check the applicable instrument.
Managing project-based leave
Construction’s project-based work model creates leave management scenarios that differ from ongoing employment:
Project closures
When a project ends and there is no immediate next project, the employer must manage the transition carefully:
- If the employee is directed to take annual leave during a project gap, this must comply with the Award’s provisions for directing leave
- If there is no work available, the employer may stand down the employee under Fair Work Act section 524 — but the employee does not accrue annual leave during a stand-down unless the Award or agreement says otherwise
- Long service leave continues to accrue during project closures in most states
Weather-related stand-downs
Construction work is frequently affected by weather. Under the Fair Work Act, an employer can stand down an employee without pay when the employee cannot usefully be employed due to circumstances beyond the employer’s control — including severe weather.
During a weather stand-down, annual leave does not accrue (unless the Award or agreement provides otherwise), and the employer can require the employee to take annual leave during the stand-down if the Award permits it.
Moving between projects
An employee moving between projects within the same employer has continuous service. Their leave balance carries over, and long service leave continues to accrue. If the employee is transferred to a different award-covered role, their leave entitlements are determined by the new award.
Long service leave in construction
Construction workers tend to have longer tenures with the same employer than other industries, making long service leave a significant liability. Long service leave is governed by state and territory legislation.
| State | Entitlement after 10 years | Pro-rata available after |
|---|---|---|
| New South Wales | 8.67 weeks | 5 years |
| Victoria | 8.67 weeks (after 7 years) | 7 years |
| Queensland | 8.67 weeks | 7 years |
| South Australia | 13 weeks | 7 years |
| Western Australia | 8.67 weeks | 7 years (limited grounds) |
For a construction business with 50 employees averaging 12 years of service, the long service leave liability can exceed AUD $500,000. This must be accrued in the business’s financial statements.
Common compliance mistakes in construction
1. Misclassifying on-site workers under the wrong award
On-site tradespeople covered by the Building and Construction On-site Award must not be classified under the Clerks Award. This misclassification results in lower pay rates and incorrect leave entitlements.
2. Not paying leave loading correctly
Construction’s “greater of” rule on leave loading must be applied per employee. While many construction employees receive the 17.5% loading, those working weekends or late shifts may be entitled to penalty rate differentials.
3. Standing down employees without following the Fair Work Act process
A stand-down under section 524 must meet specific criteria — the employee cannot be usefully employed due to circumstances beyond the employer’s control. A stand-down for convenience (for example, during a slow period) is not permissible.
4. Not paying leave on termination
All accrued annual leave must be paid on termination, including leave loading. Construction’s high turnover at project completion means this obligation is triggered frequently.
5. Ignoring portable long service leave schemes
Some states — notably Victoria and Queensland — operate portable long service leave schemes for construction workers. Under these schemes, long service leave entitlements follow the worker across employers. Construction businesses must register with the relevant authority and make contributions.
Practical steps for construction employers
- Map every employee to the correct award and classification — document the basis, especially for employees with mixed duties.
- Calculate leave loading per employee based on their actual roster and penalty rates.
- Manage project transitions carefully — document stand-downs, leave directions, and service continuity.
- Track portable long service leave obligations if operating in Victoria or Queensland.
- Accrue long service leave as a financial liability based on employee tenure.
- Keep records for 7 years — the Fair Work Act requires employers to maintain time and wages records.
For more on your core obligations, see our guide to annual leave entitlements in Australia, long service leave by state, and modern award compliance.
Frequently asked questions
How much annual leave do construction workers get?
Full-time construction employees receive 4 weeks per year under the NES. Shift workers who rotate across all seven days receive 5 weeks. Part-time employees accrue pro-rata based on ordinary hours.
Can a construction employer stand down employees during weather delays?
Yes, if the weather conditions mean the employee cannot usefully be employed and the cause is beyond the employer’s control. The stand-down must comply with Fair Work Act section 524 and the applicable award provisions.
Do casual construction workers get annual leave?
No. Casual employees do not receive paid annual leave. They receive a casual loading on their hourly rate. However, they are entitled to 10 days paid family & domestic violence leave per year.
What is portable long service leave?
Portable long service leave schemes (operating in Victoria and Queensland) allow construction workers to accrue long service leave that follows them across employers within the industry. Construction businesses must register and contribute to these schemes.
How do I calculate leave loading for construction workers?
Leave loading is 17.5% of the employee’s base rate. However, if the employee would have earned penalty rates in excess of 17.5% during the leave period, they receive the greater amount. Calculate this per employee based on their actual roster.
Sources
- Building and Construction General On-site Award 2020 — Fair Work Commission
- Clerks—Private Sector Award 2020 — Fair Work Commission
- Annual leave — Fair Work Ombudsman
- Stand downs — Fair Work Ombudsman
- Fair Work Act 2009, section 524
- Common Award Misinterpretations — RSM
This article is general information, not legal advice. Confirm entitlements with the Fair Work Ombudsman and the applicable modern award or enterprise agreement.